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Actually HL, I own 2 properties purchased during the peak that cash flow. Your mistakes are not my mistakes, your market is not my market. Just saying, I'm proof that your broad brush statements aren't accurate.
Actually HL, I own 2 properties purchased during the peak that cash flow. Your mistakes are not my mistakes, your market is not my market. Just saying, I'm proof that your broad brush statements aren't accurate.
I cant afford any more mistakes so im done with the market. I realize there are people that got lucky and timed the market but not every one was so lucky, in fact MOST were not so lucky. The fact that that event (housing colapse) even happened is going to have ALOT of people scared to invest because they know there are no protections and they can litterally loose their life savings over night.
Im glad you did well but alot of people did not. Just make sure you have your pass port in order and enough money to hire a private jet to another country when things go south .... WAY south. Better to have it and not need it then need it and not have it.
If your willing to wait 15-30 years to see black. Real estate has too long of a pay back period. 30 years is like half your life and in thoes 30 years your either paying someone to deal with broken toilets or having to fix them yourself. I would never want to be a land lord with such a long pay back period.
The only way you can make it a good investment is if you are in the few locals that get away with murder on rent rates AND you bought when the market was low, however, I know people that wont take jobs in these areas because they know the cost of living unless the company wants them bad enough to subsidize their housing AND give them the wage they want. For example I would never live in the arcadia CA area unless my housing were subsizied and up to my standards after I inspect otherwise I have no reason to live or work there lol.
Nope, all assumptions you made are wrong. Even with only 20% down, positive cash flow from month #1. Rent comparable with what others are asking, all things equal (neighborhood, condition, ...).
You can't do it on just any house - there's one around the corner from my most recent purchase that would need to be un-subdivided, repainted and have a lot of other work done that would run your initial cost way up. It'd rent about the same afterwords and still flow positive, but your upfront costs are a lot higher and you'll get a lower rate of return (I'm still crazy enough to be interested in the place if they drop the price, if only to continue revitalization in the area). It really helps to work with a skilled realtor who is able to get you in on the good ones in the right neighborhood as they come up.
Brandon Hoffman put it best - Your mistakes are not my mistakes, your market is not my market.
Mrs. NBP and I bought our house in 1987. One of those reviled FHA loans. This was right at the beginning of the runup in prices in this area. Then that bubble broke around 1991. The house was reassessed at less than what we owed. We didn't talk about walking away nor did we berate ourselves for making a bad investment. We stayed put and are still in the house. Even with this latest bubble we could still sell for roughly 4 times what we paid (it was 6 times pre-implosion). The lot is actually worth more than the house according to the State of MD.
There was a colleague of Mrs. NBP in the late 80's who, along with her husband, was flipping houses about every 6 or 8 months after living in them for that short period of time. So what was happening in the early years of 2000, I had seen before. When I warned people that a downfall was coming I was ridicluled, especially by real estate agents. My neighbor is one who bought everything she could and was even bragging about the prices (inflated) she was paying. She now would like me to buy the investment house she owns next to me. Not likely.
This generation will eventually tire of paying rent and, assuming the tax laws for mortgage interest and property tax deductions don't change appreciably, will buy houses. If rents continue to go up owning will be more attractive to them.
If anyone is spoiled it is the baby boomers..not the "echo boomers".
It's not the baby boomers who are walking way from their houses, saddling banks and HOAs, not to mention their neighbors, with the burden of their incompetence.
Nope, all assumptions you made are wrong. Even with only 20% down, positive cash flow from month #1. Rent comparable with what others are asking, all things equal (neighborhood, condition, ...).
You can't do it on just any house - there's one around the corner from my most recent purchase that would need to be un-subdivided, repainted and have a lot of other work done that would run your initial cost way up. It'd rent about the same afterwords and still flow positive, but your upfront costs are a lot higher and you'll get a lower rate of return (I'm still crazy enough to be interested in the place if they drop the price, if only to continue revitalization in the area). It really helps to work with a skilled realtor who is able to get you in on the good ones in the right neighborhood as they come up.
Brandon Hoffman put it best - Your mistakes are not my mistakes, your market is not my market.
The only way you can get cash flow positive in month 1 is if you can rent it out for more than your mortgage, that is not the case in my market. Also you better hope that you can continue to get that rent for the duration of the mortgage or you will go cash flow negitive quick. The problem with 15-30 year mortgages is you have no clue what is going to go down either in your favor or an event that will eat your lunch, all it takes is some upset in the local economy and your in bad shape. There is no way to reasonably predict what is going to happen in 30 years or even 15 years.
Plus your down payment is a sunk cost that you have to recover before you are technically cash flow positive. I have never seen a rental market that good.
The only time you are truely cash flow positive is when your total rents have paid for the house and you are collecting rent on a paid for asset that you have recovered your sunk costs from, that could take you half your life unless you bought in southern cali in the 1800's and are collecting 5k a month in rent today lol, OR you inherited property. Inheritiance is the only real way to get ahead with out spending half your life doing it.
HL, not the case at all here. Rent is usually higher than a mortgage. I have one I bought, turned right around and rented for 25% more than the mortgage. It's a fair rental price, not high.
HL, not the case at all here. Rent is usually higher than a mortgage. I have one I bought, turned right around and rented for 25% more than the mortgage. It's a fair rental price, not high.
25% higher is not going to get you a 10 year pay off, and does that 25% include your sunk costs to get you back cash flow positive in 10 years?
You would have to charge 300% of your mortgage in order to get a 10 year pay out on a 30 year note and that does not include your sunk costs like down payment and any repair costs you incured. This also assumes NO vacant months, I mean if thats your thing then thats cool but its a very high risk you are saddled with until you start to have a true postive cash flow. Also breaking even on something that I loose sleep over for 10 years is not my idea of a good investment lol.
If you have a 15 year note you only have to charge 50% over or 150% but thats 150% of a much larger monthly payment.
And then if things dont pan out, knowing the courts are not on your side and have the power to choke you if it pleases the banks to do so. Sorry not for me.
HL, not the case at all here. Rent is usually higher than a mortgage. I have one I bought, turned right around and rented for 25% more than the mortgage. It's a fair rental price, not high.
At this point they're just making numbers and claims out of thin air and parading them around like they're real. They'd probably try to claim it's impossible to have positive cash flow even if you bought a place outright if someone were to say it.
25% higher is not going to get you a 10 year pay off, and does that 25% include your sunk costs to get you back cash flow positive in 10 years?....
I am making 25% profit/mo right now. I don't care when I pay it off because I have a positive cash flow with a mortgage on it. I will occasionally have expenses that will eat into the profit. Ultimately I'll have a paid off asset and I'll be making residual income. I know you'd love to punch holes in the theory any way you can, but facts are facts and the numbers don't lie. I don't even know what all that crazy junk you were spewing is. Why is the 10 year mark so magical for a payoff for you? I know I'll have vacant months here and there, and some unexpected expenses, but long run I win. I know it's not for you and that's fine. I'm not trying to twist your arm into buying rental property, I'm just refuting your claims.
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